What is a Stakeholder?
- A person or party with interest in the success of a business
What are Internal Stakeholders?
- Are found within the business
- Are the Owners, Employees and managers
What are External Stakeholders?
- Are suppliers, customers and the lenders
What sort of Issues are there with the Business & Stakeholder relationship?
- Which stakeholders are the most important
- How the different Stakeholder groups may perceive change
- The extent which Stakeholders regard the business as a sucess
Evaluative point for Stakeholder sucess
- Some stakeholders may not benefit from business success
- If they do they will not benefit equally.
Stakeholder Objective - Owners
- Owners want the best possible return for the money they have invested in the business
- Want to see the business grow as these returns increase
How would a business pursue growth in the short run??
- Lowering Prices
- Hopefully captures more of the market and customers become loyal in the long run.
- However; this tactic reduces profits
Stakeholder Objectives - Employees
- Want high wages, bonuses and job security
- Want managers to organize their work so it is interesting and employees get job satisfaction
Stakeholder Objectives - Customers
- Customers want the best quality product for the lowest prices
- Want product innovation
- Good customer services
- Consumers can be dissatisfied by the ethics of the products and stop buying from this store, if many people do this they can have a significant effect on a business.
Stakeholder Objectives - Suppliers
- If a business ceases trading, suppliers lose a customer
- Wants repeat customers
- Wants business growth so orders increase and debts are paid quickly
- Businesses can drop suppliers to drop costs but breaks loyalty, so if the business approaches these suppliers again they may reject their offers.
Stakeholder Objectives - Lender
- A bank wants the agreed amount owed at the agreed time
Stakeholder Objectives - The Community (Positive effects of a business)
- Business brings jobs and greater spending power to the community
- Cause property prices to rise and crime rates to fall
- Actively involved in local charities
What are the positive factors a business brings to a community called?
External Factors
What are the negative factors a business brings to a community called?
External Costs (business doesn’t directly do this) / Social Costs
What are some of the external costs a business brings to a local community?
- Continuous deliveries means that there is more road congestion, greater pollution and noise pollution
- Property prices fall
What are Social Benefits and Social Costs?
- Refer to the overall business benefits / costs to society that are involved.
How are Social Benefits calculated?
Private Benefits (to the firm) + External Benefits (to society)
How are Social Costs calculated?
Private Costs (to firm) + External Benefits (to Society)
Stakeholder Objectives - Government
- If business is succeeding it is offering more jobs
- Government pays less social security benefits, and get increased tax revenue from the employees and business
- If a business exports it will grow the UK’s trading position
